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Summer 2016 Newsletter: Zero Rating Isn’t Free

In our last newsletter, we looked at an application filed against Vidéotron and it’s “Unlimited Music” service. PIAC, along with the Council of Senior Citizens Organizations of BC and the Consumers’ Association of Canada argued in their application that Vidéotron was showing unduly preferential treatment by allowing certain streaming music providers to have their data not count against a subscriber’s cap. This application has now grown into a much larger hearing.

The “Unlimited Music” plans made by Vidéotron tout free streaming music, but only for audio, and only if you were signed up for the ‘right’ services; Spotify, Stingray, and Google Music are a few examples. There is no question that streaming music has grown exponentially in the past few years, and certainly giving customers ‘free’ data seems like a positive for consumers, but the problem is much deeper and has a lot to do with a popular current topic: Zero Rating.

“Zero rating isn’t free,” asserts John Lawford, Executive Director of PIAC. “It relies on unjust discrimination against other types of internet traffic and against other  audio or video services that are not desirable partners of the ISP who zero rates. That costs everyone in terms of innovation, competion and most importantly, allows the ISPs to maintain data caps.”

This isn’t the first time that PIAC has intervened when a provider has threatened discrimination against certain types of internet traffic (sometimes described as a violation of “net neutrality” – but in fact a long-standing prohibition against unjust discrimination in telecommunications law) with a streaming service. Bell Mobility made available a similar offer with its ‘Mobile TV’ application. Customers were allowed viewing of Bell owned or controlled streaming video, at reduced prices, so long as it was seen through Bell’s app. In that case, the CRTC ruled Bell’s Mobile TV app left competitors with an undue disadvantage, as Bell was showing preference to its own services over the data of any other party providing data (including competing content), a violation of the Telecommunications Act. That case was recently upheld by the Federal Court of Appeal, and PIAC contends in its application that it is effectively similar to Vidéotron’s current program.

“By allowing unlimited streaming of specific types of online content for certain providers, Vidéotron is unduly favouring itself and its streaming partners,” says Geoff White, Counsel to PIAC. “Vidéotron is treating a very small subset of internet traffic differently. They’re doing so in such a way that, since they aren’t being charged any rates or overages, customers are obviously going to favour that content. Vidéotron’s role as a traditional telecom provider in the eyes of telecom law, is to just pass information from point A to point B. Now they are inserting themselves in an editorial manner, in a way that is helping move end-users towards certain content by favoring the way in which it’s treated from a billing perspective.“

Now that the CRTC is taking an even broader look at net neutrality and how data flows to customers in its newly announced hearing, it may be time to look at another troubling aspect of these types of services: the data cap as a whole. Providers set caps for monthly data allotmentsfor consumers for a majority of plans, meaning customers have to worry about overage fees if they exceed their monthly cap. Now, with ‘Unlimited Music’, it seems to point to these caps being an artificial problem which they’ve provided a solution for. Is the data scarce, and therefore in need of a cap to keep customers within a reasonable ‘budget’ of data, or do these unlimited streaming plans unintentionally show that data is maybe not as scarce as providers advertise? Consumers and net neutrality advocates would likely much prefer to be able to experience new media and content without being herded in the direction of companies that make deals with application providers.

PIAC hopes that the precedent set in the Bell Mobile TV case is extended as the CRTC takes a broader look at differential internet pricing. Consumers should have access to the internet that isn’t diverted by third-party money. PIAC has filed initial comments for the hearing in October and hopes to see a decision in early to mid 2017.

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